The Price of Inequality

In 2007 the United States experienced an economic downturn that caused the standard for living for millions of Americans to plummet. While the share of national income dropped for 99 percent of Americans, the top 1 percent of Americans saw their wealth increase, in some cases considerably. Joseph E. Stiglitz published The Price of Inequality: How Today’s Divided Society Endangers Our Future in 2012 to explain this income gap and offer some hope that it can be closed. Critics praised the book as comprehensive and prescient, and it received the Robert F. Kennedy Center for Justice and Human Rights Book Award in 2013.

The book’s central theme is that inequality adversely affects the US economy because it hampers growth and efficiency. But inequality is closely linked to failures of the American political system, too, because the market economy is shaped by and dependent on society and government, which enforce the rules. But as Stiglitz suggests, the political system’s failure to force a level playing field means that government is working for the 1 percent against the interests of the 99, a situation that is unsustainable for the long term.

Ultimately, all of America is paying a very high price for the rich to get richer and the poor to get poorer. Investment in public infrastructure, which helps the poor more than the rich, is in decline, and the tax system is increasingly unfair, as the middle class pays a larger percentage of their wage in taxes than the very top. All the while, the political divide is creating gridlock, preventing any chance for reform. And America’s image abroad as a champion of fairness and equality is becoming increasingly tarnished.

However, Stiglitz remains hopeful. He ends his book by suggesting a series of reforms that could start closing the gap between the rich and the poor. Stiglitz is a Nobel Prize-winning economist and a professor at Columbia University. He formerly served as a chief economist at the World Bank and chaired the Council of Economic Advisers during the Clinton administration.

Other work by this author includes the book, Globalization and Its Discontents.